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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 222.530.0%Dec 16 3:59 PM EST
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To: Glenn D. Rudolph who wrote (26459)11/17/1998 6:43:00 PM
From: Rob S.  Read Replies (2) of 164684
 
Glenn, we have come to understand this industry and momentum better (painfully so at times). The rapid "cycle of discovery" of the Internet and e-commerce has overtaken any "normal" valuation and is likely to substantially continue until upset by competitive market forces. For all the hype and the astounding valuation surrounding the Internet stocks and Amazon in particular, it must be recognized that Amazon does what they do well. I am sure that they will see greatly increased sales this fall/Christmas buying season and that no other Internet competitor is likely to defeat their sales momentum. The competitive landscape is changing but that is neither what the market is most focused on nor is it something that will have that much effect in the short term. Barnes & Noble, Yahoo!, Lycos, and numerous other competitors must put up competitive offerings and must build momentum upon their low level of sales relative to the Amazing one. Amazon will likely grow to $3-5 billion in sales within five years. If competition occurs as we think it will, those sales combined with Amazon's cost structure will result in at best narrow profits - not high enough to sustain the current, let alone the much higher price that investors hope for. Until that starts to happen all anyone is doing is highly speculative, go with the flow or against it - betting against the Internet darlings is a very risk prone gamble.
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